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Is the pullback over or just getting started? – TVO MB 2-27

Markets furiously sold off after the open on Wednesday, only to completely recover by the close. It may seem as if the pullback off SPY 280 has run its course, but volume is offering a different perspective.

The big drop of the session was accompanied by a nearly SWELTERING spike on the Heat Gauge. The recovery, however, only took us back to zero, so the majority of up/down volume action was firmly in the “down” category for the session.

Since overall volume did also get a boost, there is a chance the down move may be exhausted… or it’s just getting started. For this to be a convincing bounce, though, I’d prefer to see a bit more overall volume.

We also have TVO which has suddenly shifted direction down towards negative values, a sign that institutional buying is once again winding down. At this point, another flush down to fill the gap at 276 and possibly retest the 200 day MA seems the more likely scenario. -MD

Sentiment: HUNGRY – Markets are accumulating at an accelerated rate and big institutional buying is heavy and aggressive.

Volume: 4% – Today’s volume was higher than the previous session.

Real Feel: COOL – Bulls and bears were at a stalemate for the session.

Cycle: BULLISH II – Retail investors are overly cocky and heavily positioned in their holdings.

Portfolio: HEDGE – The market is over saturated and long-term investments warrant some protection.

Next Day Move: SIDEWAYS UP - The probability that SPY will close positive in the next session is 55%.

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